Based on the current gold price of roughly $A1550 per ounce, net cash flow before tax would be $100.6 million.

The net present value on the project is $78.9 million with an initial rate of return of 79%.

Should prices climb as high as $1700/oz, net cash flow jumps to $141.6 million while the net present value increases roughly 44% to $113.5 million and the initial rate of return goes up to 102%.

Mount Magnet said it expected initial capital expenditure and working capital requirements to come in at $31.2 million thanks to substantial infrastructure at Kirkalocka, including a 1.6-2.2Mtpa processing plant, primary and secondary crusher, 3.6 megawatt power station, 110 room camp and 1800m air strip.

Over the roughly 5.5-year mine life, the feasibility study projected 10.4 million tonnes grading 0.9 grams per tonne gold for 280,000oz recovered.

The ore reserve contained metal increased by 24% to 309,000oz gold.

The expected average annual production in the first three years ranges from 62,000-75,000oz gold and the company has set a production target of 68,000oz gold for the first year.

The head grade for the first 12 months of operations is planned to achieve an average of 1.2gpt gold.

The average life-of-mine cash operating cost is expected at $1051/oz gold.

The calculations are based on the development of an open cut mining operating and use of the existing processing plant with an upgraded crushing circuit.

The only major outstanding approvals are the mining proposal and mine closure plan, which are expected in the early second quarter this year.

The company is also working to secure a project loan and gold hedging facilities for the Kirkalocka development, including a loan facility of up to $20 million with a cost overrun facility of up to $3 million, and expects to finalise the financing in the June quarter.

The development schedule includes a six-month period to complete the plant refurbishment and construction of additional infrastructure as well as a three-month recommissioning period to achieve expected capacity.

Mount Magnet shares shed 5.7% to 5c following the announcement.